Infosys paints a gloomy outlook for Q4

Infosys paints a gloomy outlook for Q4

Infosys on Wednesday said it continued to see weakness in client spending throughout the current quarter ending March 31, 2014, and the company might only be able to meet the lower end of its annual revenue growth guidance for FY14.

S D Shibulal, chief executive officer and managing director, said the factors that led to slowdown in client sentiment in Q4 might continue in the ‘initial part’ of the next financial year (2014-15).

“Several factors (that played out during the quarter) may lead our revenues to be near the lower end of our guidance,” said Shibulal, during an investors’ meet organised by Barclays.

“At the broad level, some of our clients have seen slowdown in their businesses; these are happening across various verticals, leading to unanticipated project ramp-downs and cancellations in Q4.

Infosys paints a gloomy outlook for Q4

“However, we believe that many of the factors that led to the slowdown (in Q4) will continue to impact our clients’ spending, at least in the initial part of FY15,” he said.

These remarks came at a time when investors and observers were beginning to believe that initiatives taken by Infosys after the return of its co-founder N R Narayana Murthy last year, had started to reap results and the company would benefit from the growth in demand.

Faith in the company’s revival was further strengthened after it posted better-than-expected performance for a third consecutive quarter in October-December of 2013.

However, Shibulal said, while the company’s initiatives were showing results, its performance going forward was likely to remain ‘choppy’.

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Image: Faith in the company's revival was further strengthened after it posted better-than-expected performance for a third consecutive quarter in October-December of 2013.Photographs: Roshan Rao/Creative Commons